As of January 18, 2018, Starbucks (SBUX) was trading at $61.09. On the same day, analysts were expecting the company’s stock price to reach $63.60, which represents growth of 4.1% from its current stock price.
After the announcement of lower-than-expected fiscal 4Q17 earnings, analysts had lowered their 12-month target price to $62.20. However, the enactment of tax reforms on December 22, 2018, and Starbucks’s expansion plans in China appear to have compelled analysts to raise their 12-month target price. On January 18, 2018, Credit Suisse raised its target price from $54 to $57. Earlier, Barclays had increased its target price from $58 to $65 on January 16, 2018, and Oppenheimer had raised its target price from $60 to $62 on January 4, 2018.
The target prices and return potential of Starbucks’s peers are as follows:
- McDonald’s (MCD) has a target price of $186.07, which represents a return potential of 6.6%.
- Dunkin’ Brands (DNKN) has a target price of $60.95, which represents a fall of 6.4% from its current stock price.
- Domino’s Pizza (DPZ) has a target price of $227.37, which represents a return potential of 7.8%.
Of the 33 analysts that follow Starbucks, 69.7% recommend a “buy,” 27.3% recommend a “hold,” and the remaining 3.0% recommend a “sell.” Starbucks stock moves in tandem with analysts’ rating. When they raise their target price, the stock moves up, and vice versa. Currently, Starbucks is trading below analysts’ target price. However, this does not mean an automatic “buy.” Investors should analyze various analyst estimates discussed in our earlier articles before making any investment decisions.